Professional Practice Update Impact of Contract (Third Party Rights) (Scotland) Act on property law

The Contract (Third Party Rights) (Scotland) Act 2017 came into force on Monday 26 February 2018.

Our Property Law Committee has been considering how this will affect the property sector.

The new statutory framework replaces the common law doctrine of jus quaesitum tertio and will apply to all contracts entered on or after 26 February 2018. The Act does not have retrospective effect and therefore will not affect existing contracts.

There are specific conditions that have to be met for a third party right to be created under the Act. However the view of the Committee is that where the intention of the parties is to specifically exclude third party rights then it would be prudent to add a clause to that effect to all contractual documents. For example, “the Missives do not create any rights in favour of third parties under the Contract (Third Party Rights) (Scotland) Act 2017 to enforce or otherwise invoke any provision of the Missives”.

The Property Standardisation Group are currently updating their suite of styles to reflect this legislative change. This will also be considered for inclusion in any update to the Standard Conditions.